An Accredited Education

What is a put option?

Video Transcription

Okay, today we’re talking about the common question that’s often asked, and that is what a put option is? There are two ways to answer this question because options are a contract, so this involves two different answers. If you’re buying a put option, you have the right to sell a stock at a fixed price within a set time frame. If you’re selling a put option, you have an obligation to buy a stock at a fixed price within a set time frame. The thing to remember here is this is a contract between two investors. That’s what the market makers are looking for. Any one buyer can match up with any one seller, and now you have the answer to what is a put option.